Cumulative prospect theory (CPT) is a model for descriptive decisions under risk which was introduced by Amos Tversky and Daniel Kahneman in 1992 (Tversky, Kahneman, 1992). It is a further development and variant of prospect theory. The difference between this version and the original version of prospect theory is that weighting is applied to the cumulative probability distribution function, as in rank-dependent expected utility theory but not applied to the probabilities of individual outcomes. In 2002, Daniel Kahneman received the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for his contributions to behavioral economics, in particular the development of Cumulative Prospect Theory (CPT).
Read more about Cumulative Prospect Theory: Outline of The Model, Differences From Prospect Theory, Applications
Famous quotes containing the words cumulative, prospect and/or theory:
“But while ignorance can make you insensitive, familiarity can also numb. Entering the second half-century of an information age, our cumulative knowledge has changed the level of what appalls, what stuns, what shocks.”
—Anna Quindlen (b. 1952)
“The same soil is good for men and for trees. A man’s health requires as many acres of meadow to his prospect as his farm does loads of muck.”
—Henry David Thoreau (1817–1862)
“In the theory of gender I began from zero. There is no masculine power or privilege I did not covet. But slowly, step by step, decade by decade, I was forced to acknowledge that even a woman of abnormal will cannot escape her hormonal identity.”
—Camille Paglia (b. 1947)